ADX Energy (ASX: ADX): Equity raise to fund increased WI in Anshof
• ADX is raising A$4.2 mm of new equity plus up to A$1 mm through an offer to shareholders at a price of A$0.10 per share. Subscribers will also receive half a warrant with an exercise price of A$0.16 per share• The capital injection will provide funding for ADX’s increased interest in Anshof (from 50-60%) following the decision of Xstate Resources not to participate in the upcoming programme as well as funding for the Welchau-1 gas well (50% funded by MCF Energy) which ADX expects to spud in January 2024 after an anticipated environmental clearance .
• MND now holds 40% in Anshof-2.
• We re-iterate our target price of A$0.80 per share as we factor (1) the dilution associated with the equity raise and (2) the increased interest in Anshof. This represents ~8x the current share price.
Drilling programme
Drilling of the Anshof-2 appraisal well is ongoing. Depending on the oil water contact, this well could start derisking up to 21 mmboe gross 3P reserves + 3C resources (on top of the existing gross 2P reserves at Anshof of ~ 5 mmboe). ADX then plans to drill the high impact Welchau exploration well in January. The Anshof-1 development well is planned for 2Q24 to increase gross production at Anshof to 750-1,000 bbl/d from 3 wells. Mobilisation a permanent production facility (3,000 bbl/d capacity) has commenced with installation after the drilling of Anshof-2Pending the finalization of another farm-out transaction with MND (terms already agreed), another gas exploration well is expected to be drilled in 2H24.
Valuation
We have rolled forward our DCF by a year to YE24. Our new Core NAV based on the company’s 2P reserves (assuming 60% WI in Anshof) stands at ~A$0.16/sh. De-risking the 3P/3C resources at Anshof would add ~A$0.50/sh (~5x the current share price). Our ReNAV continues to stand at ~A$0.80/sh. The Welchau prospect, expected to be drilled in January, has an unrisked NAV of A$1.60/sh.
Auctus Advisors is a specialist Equity Capital Markets and Advisory business with a focus in the Energy Sector.
The partners have complementary skill sets, with decades of experience across Equity Capital Markets, Investment Banking and the Energy industry. We have worked at Société Générale, Canaccord Capital, BMO Capital Markets and Schlumberger. Most recently we have worked together for many years at GMP FirstEnergy.
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